Present Value Calculator
Calculate the present value (today's worth) of a future lump sum, given a discount rate.
- Future Value (in 10yr)$25,000.00
- Present Value (today)$13,959.87
At a 6% discount rate, $25,000.00 that far in the future is only worth $13,959.87 in today's dollars.
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PV = FV / (1+r)^t
About the Present Value Calculator
A dollar promised ten years from now isn't worth a dollar today — it's worth less, because money you have now can be invested and grow, while money you're owed later can't. Present value answers the actual question: given a discount rate that reflects what you could otherwise earn, what would you need to invest today to end up with that future amount? Comparing a future sum to its face value instead of its present value is how people overvalue delayed payouts.
This is the math behind deciding between a lump sum now and a larger payment later — an inheritance you could take now or in installments, a lawsuit settlement offering a smaller amount today or a larger structured payout, or valuing a bond or pension promise by discounting its future payments back to what they're actually worth today.
The future amount and rate you're testing stay local to your browser — there's no account required and nothing about the settlement, payout or investment you're evaluating gets sent anywhere.
Frequently asked questions
What discount rate should I use for a present value calculation?
It should reflect what you could realistically earn on the money elsewhere at similar risk — often a savings rate, bond yield, or expected investment return depending on the comparison you're making. A higher discount rate always produces a lower present value, since it assumes your money could grow faster elsewhere.
Why does present value decrease as the time horizon gets longer?
Because the discount rate is applied compounding, year after year — the further out a future payment sits, the more years of assumed growth you're giving up by not having it now, so its value today keeps shrinking the further away it is.
Is present value the same as inflation adjustment?
They're related but not identical. Present value discounts a future sum by an opportunity-cost rate to find its worth today; adjusting for inflation strips out the effect of rising prices specifically. Depending on the discount rate you choose, present value can implicitly reflect inflation, investment return, or both.
How is present value used to price a bond or annuity?
Both are valued by discounting every future cash flow — coupon payments, an annuity payment, or a final lump sum — back to today at a market-appropriate rate and summing the results. That's exactly the calculation this tool performs for a single future amount.
Would I rather take a smaller lump sum now or a larger amount later?
Discount the later amount back to today using a rate close to what you could actually earn on the lump sum, then compare the two present values directly. If the discounted future amount is smaller than the lump sum on offer, taking the money now is the better deal in pure financial terms.
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